Selection and prioritization of mitigation measures to realize climate neutral operation of a water cycle company

Waternet is the public water utility of Amsterdam and surroundings, responsible for all water related activities: drinking water supply, sewerage, wastewater treatment, surface water management, groundwater management, flood protection and control of the canals in Amsterdam. Some key characteristics are shown in Table 1. Because Waternet is in charge of all these activities, it can be seen as a water cycle company (Van der Hoek et al. 2011). Waternet has the ambition to operate climate neutrally in 2020. A climate neutral operation is defined as an operation without a net greenhouse gas (GHG) emission. This implies that additional measures are required to compensate for the inevitable GHG emissions, the so-called compensation measures.

The ambition of Waternet to operate climate neutrally is driven by the policy targets of the City of Amsterdam, the Dutch government and the European Commission. The City of Amsterdam aims at a climate neutral municipal organization in 2015, 40% reduction of GHG emissions in 2025 compared to 1990, and 75% reduction of GHG emissions in 2040 (City of Amsterdam 2009). The European Commission recently published a communication in which a policy framework is proposed for climate and energy in the period from 2020 to 2030 (European Commission 2014). This includes the establishment of targets to reduce the GHG emissions by 40% compared to 1990, the increase of the share of renewable energy to 27% and the realization of 30% energy savings. These targets concern the whole European Union for the year 2030. Up until now the climate and energy targets for 2020 were 20% reduction in GHG emissions, 20% use of renewable energy and 20% energy savings. These targets were the basis of the objectives of the individual member states. The Dutch government also used these targets to develop the national policy. The importance of reducing GHG emissions is even more stressed when the IPCC's (Intergovernmental Panel on Climate Change) Fifth Assessment Report is taken into account (IPCC 2013). One of the conclusions is that continued emission of greenhouse gases will cause further warming and changes in all components of the climate system. Limiting climate change will require substantial and sustained reductions of greenhouse gas emissions.

Economic considerations are especially important for Waternet. Waternet has three core values: economic effectivity – sustainability – customer orientation (Waternet 2015). Measures which reduce the GHG emissions or compensate the GHG emissions contribute to the core value sustainability, but may have a negative effect on economic effectivity as a result of more expensive processes, chemicals and raw materials.

The objectives of the study described in this article were threefold. The first objective was to create a detailed inventory of measures to operate climate neutrally in 2020, which go further than just energy recovery from the water cycle as in the previous inventories. The intention was to identify also measures related to other forms of renewable energy, process modifications in water treatment (both drinking water and wastewater), and use of alternative chemicals and raw materials. The second objective was to quantify the measures not only in terms of reduction of GHG emissions, but also in terms of finances, more specifically the required investments and the effects on yearly costs. The third objective was to develop a framework to prioritize all the measures based on the effect on GHG emissions and the financial implications.

To identify measures, a workshop was organized for employees of Waternet. In this workshop all relevant disciplines were represented. The attendees were expected to propose measures to reduce GHG emissions without any restrictions. At the workshop all proposed measures were roughly estimated for their effect on GHG emissions. Subsequently, in a detailed study, all proposed measures were analyzed in-depth for their effect on GHG emissions and their effect on costs, and their realization periods were estimated.

GHG emissions were calculated based on the international Greenhouse Gas Protocol (World Resource Institute (WRI) & World Business Council for Sustainable Development (WBCSD) 2004). To determine the effect of greenhouse gas emissions on the climate footprint, the Intergovernmental Panel on Climate Change Global Warming Potential (IPCC GWP) 100a method (Solomon et al. 2007) was used. Within this method, only the environmental problem of climate change is evaluated and the results are expressed in CO₂ equivalents.

In the Greenhouse Gas Protocol, emissions are divided in three scopes:

• Scope 1: direct GHG emissions. Direct GHG emissions occur from sources that are owned or controlled by the company. This covers the emission of CO₂ due to the use of fossil fuels, and the emission of nitrous oxide (N₂O) and methane (CH₄) as process emissions from wastewater and sludge treatment (Frijns 2012).

• Scope 2: electricity indirect GHG emissions. Scope 2 accounts for GHG emissions from the generation of purchased electricity consumed by the company. Scope 2 emissions physically occur at the facility where the electricity is generated.

• Scope 3: other indirect GHG emissions. Scope 3 emissions are a consequence of the activities of the company, but occur from sources not owned or controlled by the company. Indirect emissions result from, for example, extraction and production of purchased materials (chemicals, raw materials) and fuels, transport-related activities, waste disposal and use of sold products and services.

Scope 1 and scope 2 directly relate to the operations of Waternet and can be directly influenced by Waternet. Scope 3 concerns the emissions caused by chemicals, raw materials and services used by Waternet by the suppliers of these goods, and the emissions due to the use of products and services sold by Waternet. According to the Greenhouse Gas Protocol, scope 3 is optional. Accounting for scope 3 emissions need not involve a full-blown GHG life cycle analysis of all products and operations. In this study, for scope 3 positive effects on GHG emissions of measures initiated by Waternet, such as recovery of energy from the water cycle and reuse of biomass from the water cycle, were also taken into account and credited to Waternet to realize the aim of a climate neutral operation of Waternet.

Costs included operational costs (OPEX) and capital costs (CAPEX). To calculate capital costs from investment costs, two types of asset were defined: pipes and installations. For pipes a linear depreciation over 40 years was assumed, and for installations a linear depreciation over 15 years. In both cases an interest rate of 5% was assumed. Costs (OPEX) and investment costs were based on detailed cost calculations, use of the RoyalHaskoning-DHV cost calculator (RHDHV 2015) or expert judgment.

In total 68 measures were collected and analyzed in detail for their effect on GHG emissions and costs. The measures partly fit in the existing systems and operations of Waternet, and partly require a total renewal of the systems and operations. The measures in the first category were placed in the relevant scopes, while the measures in the second category were placed in an additional category ‘from scratch’. Many measures require a realization period exceeding the year 2020. Therefore, 2050 was also taken as a realization horizon. Table 2 shows the results of this categorization. The results show that potentially it is possible to operate climate neutrally in 2020, as the reduction in GHG emissions exceeds the required 48 kton. Measures in scope 1 and scope 2, which can be directly influenced by Waternet, are not sufficient to operate climate neutrally in 2020. From the inventory it is clear that also measures have to be introduced from scope 3. In scope 3, especially the recovery of energy from the water cycle has a high potential. In 2050 recovery of energy from the water cycle exceeds 120 kton, which means that it covers more than 80% of all potential scope 3 measures (146.4 kton).

The specific measures in scope 1, 2 and 3 are shown in Tables 3, 4 and 5 respectively. The tables show the reductions in GHG emission and the investment costs related to each measure, both for the time horizon 2020 and 2050.

Based on the effects on GHG emissions and the related costs, the measures can be prioritized in different ways. Two different approaches were considered. The first approach is based on reducing CO₂ effectivity, in which CO₂ effectivity is defined as costs per ton CO₂ emission reduction. The costs concern the yearly costs including operational costs (OPEX) and depreciation costs (CAPEX). The second approach is based on reducing financial efficiency, in which financial efficiency is based on cost savings (OPEX + CAPEX) related to the investment costs. The core values of Waternet are economic effectivity, sustainability and customer orientation. To comply with the core values economic effectivity and sustainability, a prioritization was chosen based on reducing CO₂ effectivity. By using CO₂ effectivity as the basis for prioritization, both the core values of sustainability and economic effectivity are taken into account, while by using financial efficiency as the basis for prioritization only the core value economic effectivity is taken into account.

The decrease in yearly costs which can be realized originates to a large extent from scope 3 measures, which in turn are for the major part related to energy recovery from the water cycle, which is partly sold to clients. This positive cost effect thus cannot be only credited to Waternet, but also to the clients who buy and use this renewable energy. In fact it has to be seen as cost savings for the whole society.

Table 6 compares the situations in which 2020 and 2050 are chosen as target years to realize a climate neutral operation, and in which the measures are prioritized based on CO₂ effectivity. Although the number of measures to reach the target in 2020 is much higher, the total financial investments in 2020 are relatively low (€ 60 million compared to € 100 million in 2050). The ‘Horizon 2050 case’ yields higher yearly cost savings, but the total cost savings of the ‘Horizon 2020 case’ up to 2050 are calculated to be € 50 million higher. Based on the difference of € 50 million in 2050 in favor of 2020 as the target year, and higher yearly cost savings of € 11 million per year for the case where 2050 is chosen as target year (€ 16 million/year–€ 5 million/year), it will take 4.5 years before the ‘Horizon 2050 case’ exceeds the ‘Horizon 2020 case’ in total cost savings. For uncertainty reasons it seems financially more attractive to have 2020 as the target year to operate climate neutrally: uncertainties are higher in the long term and thus the realization of these higher total cost savings in the long term is more uncertain.

Managing 34 projects up to 2020 is a large assignment for Waternet. Therefore, from a managerial point of view, it may be beneficial to start with those projects that have the largest absolute contribution to the reduction of GHG emissions (and not the highest CO₂ effectivity) and to end up with measures with the lowest absolute contribution. From a practical point of view this manageability may be added to the prioritization criteria.

Another criterion that may be considered is the dependency on other partners to realize the GHG emission targets. For example, recovery of energy from the water cycle (scope 3) is attractive, but it can only be realized in close cooperation with partners who want to invest in the required equipment and who can use the recovered energy. In practice it appears difficult to establish this close cooperation. For that reason, focus on measures and projects in which Waternet is less dependent on partners may be beneficial. The drinking water treatment processes and wastewater treatment processes offer these possibilities, as already shown by Mohapatra et al. (2002) for the drinking water treatment processes of Waternet and by Klaversma et al. (2013) for processes in the whole Amsterdam water cycle.

An in-depth inventory of measures, covering all water-related activities of Waternet, showed that it is possible to operate climate neutrally in 2020. In 2020, a total of 68 measures, including energy recovery from the water cycle and reuses of biomass from the water cycle, result in a reduction of GHG emissions of 123 kton. In 2050 a reduction of 388 kton can be reached. This exceeds the required reduction of 48 kton.

Both an evaluation of GHG emission reductions and of accompanying financial effects is necessary to prioritize the measures. In order to be both cost effective and sustainable, prioritization of measures based on CO₂ effectivity defined as total yearly costs per ton CO₂ reduction, was shown to be a good approach.

Using this approach it can be concluded that 34 measures are required to reach the target of climate neutral operation in 2020 and 10 measures are required to reach the target in 2050. While total investments range from € 60 to € 100 million, total cost savings until 2050 are € 165 million for the 34 measures implemented from now until 2020 and € 115 million for the 10 measures implemented from now until 2050, making the option with 2020 as the target year financially more attractive.